1. Field of Invention
This invention relates to a computer implemented charting method for charting movements of financial market traded instruments by overlaying discrete quantified elements of time and volume distributions onto the conventional price-time chart.
2. Description of Prior Art
In financial charting, the Bar Chart and the Japanese Candlestick Chart are two forms of price-time charts most widely used by traders and analysts as means of predicting future price movements. Each bar in these two types of charts displays the open, high, low and close prices (herein after abbreviated as OHLC) traded by a financial instrument (e.g. stocks, indices, currencies) in a given time interval, which is called the timeframe of the chart. Thousands of tools and techniques have been developed based on the time-series analysis of these OHLC prices and collectively this is known as technical analysis.
However, for every financial commodity, between the market opening and closing, and within the high and low, there are a lot of other activities and phenomena taking place that are known to be useful for monitoring overall market conditions. For example, the area that market actively accumulates, the price that trades the most volume, and how the market behaves when the price reaches a certain high or low price vicinity. It is well-known that these intra-market information are used extensively though not visible from the conventional charts by traders and analysts formulating trading strategies.
The conventional OHLC charts which displays only the OHLC prices obviously fail to provide a complete picture of the underlying market conditions. The intermediary paths which the price moves from the open to close have been ignored. Traditionally, traders who want to keep track of such intra-market information have to rely on a tedious manual process, such as observing price ticks from a quote screen and recording the information into a log-book.
As said, for a given bar, subtle intra-market information cannot be observed from its mere OHLC prices. Nevertheless, this information can be deduced by analyzing the distributions of time spent and volume traded across prices in the bar. For example, by building a frequency distribution diagram which records the amount of time/volume units traded for each price on the bar, information such as which price ranges contain high activities, low activities and most activities can be easily discerned. Furthermore, various statistical parameters can be computed based on this distribution. By graphically overlaying a subset of this information onto the conventional OHLC chart using simple geometric figures such as a colored dot or a rectangle, a new type of chart is formed.
Under the present invention, this resulting new form of chart is made to resemble the conventional chart as much as possible so that traders who are used to view the latter will not find the new chart unfamiliar, but rather, more informative.